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Making the most of charitable giving Credit: sirtravelalot /

Making the most of charitable giving

Charities carry out vital work in the community and have recently been much to the fore. They support almost any field you can think of – medical research, social justice, the environment, animal welfare and the arts, to name but a few. Most charities depend heavily on donations from individuals so it’s common sense to maximise the impact of your gifts.

A regular monthly commitment gives charities a reliable income stream and allows you to budget for your donations. For greatest effect, provided you pay enough tax (at least one quarter of your total donations in the tax year), make sure you tick the gift aid box, which will let the charity claim gift aid tax of £25 for every £100 you give. If your top rate of tax is more than 20%, you can also claim tax relief yourself. No details of your tax affairs will be disclosed to the charity.

Be careful if you donate from a joint bank account, especially if the account holders pay tax at different rates, or one of them is not a taxpayer. The gift aid declaration must be from the actual donor, or a joint declaration could be made if both are taxpayers.

Make sure you tick the gift aid box. That will let the charity claim gift aid tax of £25 for every £100 you give.

Another potential pitfall comes where the donor receives some benefit from the charity. Gift aid relief is due only if the benefit is minor, for example free admission to heritage properties with the National Trust does not usually prevent gift aid. However paying for membership for another person is always outside gift aid relief, because your payment is a gift to the other member, not to the charity.

You should report your gift aid donations on your tax return. You can also include donations you are making in the current year and carry them back, provided your return is not late. For example you could claim relief in your 2022/23 tax return on donations made from 6 April 2023 up to the date you submit your return. You may wish to do this if you want tax relief sooner or if you will not pay higher rate tax in 2023/24, but you did in the previous year.

Newsletter Jan/Feb 2023
Newsletter Jan/Feb 2023
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